Home buyers buying a property off-plan get more rights

Prospective homeowners who wish to buy a property off-plan have with the introduction of the Consumer Protection Act an improved protection of South African consumer rights.

The bill is a comprehensive revision of all existing legislation related to consumer rights, which also affects property developers. Schalk van der Merwe, a property attorney at VFV Mseleku, said the act will offer consumers buying off-plan far greater protection. It will significantly lessen the risks buyers face from the development industry, but at the same time increase the risk for developers.

He says the legislation will impose much greater responsibility on developers to look after buyers, from the point of marketing a property to ensuring that the buyer is entirely satisfied with the end product. The reason for this is that the buyer does not have an opportunity to check what he is buying at the time of signing the contract. If, on completion, the product delivered to the buyer deviates from what is described in the contract or advertising material, the buyer can cancel the contract and return the “goods” at the developer’s expense.

Deceptive marketing material, such as stating that the property is five minutes away from schools or that it is suited to some purpose for which it has not been zoned, can give the buyer the right to return the property. The courts will now also have the power to interpret the contract between the parties more widely, also with reference to the parties’ conduct when concluding the contract, and can declare a contract null and void if the actions of the seller or his agent were unfair or unlawful.

The consumer is further protected by a brand new “cooling off” rule when the property is sold by means of direct marketing. This rule has a much wider reach than the existing right to a cooling-off period, which only applies to the sale of properties worth less than R250 000.

The developer will also be held responsible for any defects that arise afterwards. Van der Merwe said this could lead to serious litigation, but is a huge step forward for the man in the street.